In the world today, there are probably over fifty-thousand problems or more still in need of solutions and certainly some better ideas. Online there is an explosion of wonderful things, innovations, inventions, discoveries and small business start-ups seeking to solve some of these problems.
And then what happens to them? That is a good question. And in one of these posts, I’m going to try and answer that. But, before I get on a tangent about only 1.9% of women owned businesses getting any venture capital and how start-ups, especially women owned start-ups are ending up with loan packages at 40% interest rates and having to pay off investors at the two or three year mark when the business should be getting established, then taking a hit instead – I’ll cover some of the things still needing solutions.
But first, I found this article in my twitter feed and went over to read it –
It describes why the US may have missed out on millions of inventors. Their research indicates that –
WHY IT MATTERS
Innovation has slowed in the U.S., stymying economic growth. To get back on track, the U.S. needs more low-income children, women, and minorities to become inventors — but that won’t be easy.
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The research also shows that innovation in the U.S. could quadruple if women, minorities, and children from low-income families became inventors at the same rate as men from high-income families.
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Whatever policies are eventually adopted, policymakers need to think in terms of long-term solutions. “You want is to increase the pipeline of people on the supply side who are great inventors,” Van Reenen said. “You want to take the talent that is already in America and get those kids imagining themselves being an inventor or potential inventor. It is not a quick fix, but in the long run it is going to be a more effective policy.”
It is worth going and reading that article, however, I just about hit the ceiling when I read it and even now with a four bullet point list of what I want to say about it – well, angrier about it than I can even express.
When a man, young man, or boy in white upper class America comes up with an invention – what happens next is tremendously different than what happens when someone from any other of those groups, gender or income levels invent or innovate something.
There is more than whether someone can believe themselves to be an inventor. It takes being able to have some help and support, protection from theft of the invention and massive amounts of money and networking to get the invention patented, prototyped and then into investor backing processes. Women and minorities don’t have that.
One of these 50,000 plus problems still in need of good solutions and inventions is a way to take mining tailings out of the water system once they’ve been allowed to get into it. Obviously, that continues to be a problem in the United States and around the world.
Let’s say I have designed something for this purpose and am a woman without any real support from friends and family to back my idea to fruition. How often that is the case for every woman, every person without a strong financial foundation and most minorities, people that are poor and people who have disabilities specifically.
There are no family members going to network an attorney friend or blueprint maker to any of us as they would if a white male from an upper class family has the idea. There are no instances of getting some family members to financially back having the prototype made or getting the patent process done or pitching it to other people for us as happens for those guys and their idea.
So, when the researchers in this MIT/Sloan study support putting in place programs to help people who are women, who are poor and who are minorities believe we can invent and be inventors, it is very disingenuous.
We do create, invent solutions, innovate and make inventions that solve real world problems, but without the other components that are obviously available to white men who do it – from family, from friends, from investors, from bankers, from the community at large, from attorneys, from skills in their family’s networks of acquaintances – our inventions are lost to mankind and to our country.
These inventions and innovations either don’t get brought to fruition, are stolen by those who have means as we try to do something with them, or are ignored by companies until the patent we do manage to get doesn’t have the fees paid or runs out – then takes it for nothing.
Families of middle class and below, economically disadvantaged, working poor and outright financially destitute individuals simply are denied the access and equal opportunity for processes of protecting the invention or innovation or idea from inception to realization to be available to us.
Inventing and inventions, innovations and concepts for an innovation that could be brought to the marketplaces are not treated with value in these arenas either because everyone has seen that there is no chance of realizing any rewards from those efforts and bringing it to the marketplace.
Even once the patent is made, prototype created and market analysis is done for some product or invention, there is no money to go forward from that point for people in these groups either. Investors want to see 2 -3 times their money back in short periods of time and see that it can be done without any risk to them whatsoever.
No matter what invention or innovation it may be, there is typically no existing track record of what it will do in the marketplace because it is new or a new approach or has not been done that way already or would have to supplant something else in the market that is currently being used for whatever problem it approaches. That makes it appear to be unworthy of the risk involved of backers putting the money with it that the process would take to bring it into the market successfully.
Some investors, angel investors, venture capital investors, banks and sources intended to serve minority run businesses won’t even approach these new ideas without a track record. And, some loans to do it if not denied, have interest rates of 40% which rob the business potential of the idea at every stage. Then, about the time the business with this new invention or innovation are getting established, investors pull their money out – after 2 – 3 years, if anyone from any of these groups even get that far with it. Most often, the access for funding is simply non-existent no matter how many are approached.
To show the picture a little clearer – if a white male in a family has an idea for an invention, the first thing that happens in his experience with it is to receive respect for his value and the value of whatever he has come up with. Next, family members hook him up with friends of theirs and from their networks of acquaintances, that can help the idea be fleshed out into drawings and plans or they pay for it to be done outright.
Then, family members and business friends hook that guy up with an attorney to write out a non-disclosure agreement so the innovation, invention or idea can be shown to potentially interested companies.
Then, they call their friends and extended family members and pitch the need for backing this idea financially FOR HIM, and line up funds to get the thing going so the patent can be filed and a prototype created.
They might even get drawings or computer work done from a friend or family member or hire it to be done, to show off the idea, invention or innovation so it looks slick when they take it to bankers and friends who have access to invest in it.
Then, rather than the person – the white male from an upper class income in this case, having to pitch the idea, invention or innovation through his own efforts, there is already a team of family members, friends of the family, extended family and business acquaintances of the family supporting him, supporting his efforts, supporting his idea or invention, protecting the invention with appropriate legally binding elements, but also pitching it for him, pitching it to funding sources and rounding up money for it – for him.
That is not what happens to women, people who are poor or even middle-class, minorities, disabled people, elderly people, and children of every other group that is not financially well-off.
But, we do hear a lot of “who do you think you are?” and “why should I give any money to you?” As well as, we do get a lot of ideas, inventions, innovations and fully fleshed out prototypes of inventions and marketable products stolen from us that we’ve invented or created, hijacked from us, diverted from us participating in any of the rewards of them despite having created them.
The stories of that are far and wide, common in so many iterations that the experience of those around me without great financial means match my own in this area.
It is apparently been and continues to be a common practice, to not allow rewards of our inventions, labors, ideas, innovations, new characters, new processes, new possibilities for things to come to us. It must be intentional without those in our society doing it having any understanding of the cost to all of us and our nation’s potential when they do it that way.
The March for Science is going to be on April 14 this year. It is important this year more than ever to stand up for Science and for STEM in the United States as it is all under attack daily throughout our government in its current iteration.
At a time when America needs science and technology to make significant leaps forward to catch up with the rest of the world who has been supporting education, higher education, science, math, technology and engineering with massive efforts, our nation’s leaders have chosen to make war on science at every opportunity and in every agency, every policy, every possible way.
We need education to support STEM now more than ever and to support education for our children and adults to be competitive in a global playing field where we have fallen behind. Now, rather than supporting our nation to be in a leadership role in science, technology, innovation and education, it is being de-funded, demeaned, derided, discredited, dismantled and destroyed.
These actions will set our nation behind by years upon years against other nations’ efforts supporting STEM, higher education and science, in particular. Please join the March for Science – whether you are a scientist or not to show America’s business leaders and political decision-makers that we stand together supporting fact-based and evidence-based decision making, scientific reason and educated thinking.
How would it EVER make sense for me as a company to be required to pay the price I’m charging you for buying me? And, pay the interest on that debt you used to buy me as a company – AND pay you management fees for destroying the company I’ve built that you’re charging me the price of buying – from me – so you can own it?
Why wouldn’t the borrowing that was done to buy Toys R Us belong to the private equity firms who bought it?
What happened to Toys R Us?
Apparently, the company was loaded with debt that came from three private equity firms forcing the company to pay for its own purchase by them back in 2005. Bain Capital, KKR and Vornado Trust Realty bought Toys R Us with the promise they would pay off the $2.3 billion in debt that Toys R Us already had at the time. Then, rather than doing that, these private equity firms added the debt they acquired buying the company and added it to what was already owed by the Toys R Us company.
That meant a debt of $7.2 billion has been owed by the company since that time and each year having to pay to roll it over by servicing the debt and never having paid it off.
Toys R Us was paying $400 million a year to simply service the debt plus paying management fees and making payouts to the private equity firms.
So, despite the toy industry seeing increases across the world in sales and the Babies R Us stores of the chain being profitable AND the 15% share of the entire toy market being enjoyed by Toys R Us which is phenomenal across its 1600 stores in 38 countries – it was forced into complete bankruptcy (Chapter 7 Bankruptcy now).
When Toys R Us sold to Bain, KKR and Vornado, 80 percent of its asking price of the $6.6 billion price tag was paid by Toys R Us and not those acquiring the company – which would be illegal in any other context of finance, loans and buying something.
Then, by putting this debt load on the company, it assured that money coming into the company could not be used in a vast array of other ways to upgrade and maintain their stores, increase their online presence, hire more sales people, or even to keep the sales staff they had that were already familiar with their stores and products, among other things.
Effectively, after buying KB toys which had been the second biggest toy retailer in the US, the same private equity group robbed that company of its cash resources to operate as well, even before the Toys R Us brand was bled dry of cash by the same pattern of destructive acquisition.
After buying KB Toys in 2000, Bain and its co-investors had the retailer borrow $85 million to pay the firm and its co-investors a dividend — a move that left the chain, which had been generating steady earnings, strapped for cash as deepening price cuts at Walmart lured more shoppers away from malls.
In that case, Bain’s cash grab left it with a profit on its investment, despite the fact that 86-year-old KB Toys got liquidated in 2008.
It looks like Toys R Us, that was built from 1948 into a mammoth successful and very profitable toy stores, wasn’t bought for $6.6 billion. It was bought for $1.3 billion in equity by the three firms, Bain Capital, Vornado Realty Trust and KKR.
This article said that the fees and interest on the debt from that buyout was costing Toys R Us $470 million a year in service. It also says that the price for the company during the buyout was $7.3 billion. Of which, the private equity firms put up what? Obviously, not cash. I’m going to look that up.
Bain, KKR, Vornado Suffer Wipeout in Toys ‘R’ Us Bankruptcy
The three firms and their co-investors sank $1.3 billion of equity into the takeover of the Wayne, New Jersey-based toy company, financing the rest with debt, according to company filings. The debt included senior loans in which they held a stake.
Partly offsetting the loss is more than $470 million in fees and interest payments that Toys “R” Us awarded the firms over time.
And from this article, it describes briefly, the typical method involved in these types of buyouts which follow a pattern of destroying the assets of the company’s operations while stealing resources (legally) at every point along the way.
It would be as if I gave someone $3 to own something that cost $2,000 and had someone else responsible for paying the entire amount, and giving me back several thousand dollars for having put up $3 in the first place.
I’d almost bet the $3 they used in the form of $1.3 billion wasn’t even cash or real assets.
Toys R Us and why the retail downturn is all about debt
“Leverage just means you’re using lots of debt,” said Eileen Appelbaum, co-director of the Center for Economic and Policy Research.
If a private equity firm wants to buy a company, it’ll put up a small portion of the money. Then it’ll go to the bank and borrow the rest.
The key? “They put the debt on the company they buy,” Appelbaum said.
In other words, the firms take out these loans, buy a company and then make that company pay the loans back.
Despite having 15% of toys sales in the marketplace and a heavier shopping season last Christmas with shoppers spending $800 billion during the holiday season, according to FT (see below for article), Toys R Us was facing massive loan payment costs that put it into liquidation status.
**
Toys ‘R’ Us Has 15% of the Toy Market And It’s Still Going Under. Here’s Why.
Fifteen percent of U.S. toy revenue. With that kind of market share, Toys ‘R’ Us should be in a comfortable position, not on the ropes.
The pattern followed by Toys “R” Us is typical in private equity takeovers. Management is bought off: John Eyler, CEO of Toys “R” Us, was compensated $65.3 million upon the buyout’s completion. Employees have no say in the matter. Then come the layoffs, debt transfers and shortsighted asset sales. Funds are earmarked to pay down debts—Toys “R” Us was spending more annually on debt payments than it was on its website and stores—even as cash reserves are depleted.
Before the buyout, Toys R Us had $2.2 billion in reserves. As of 2017, that number is down to $301 million.
US retail’s turbulent relationship with private equity
DECEMBER 29, 2017
FT research shows many of the largest leveraged buyouts in the sector over the past decade have either defaulted, gone bankrupt or are in distress
At least 50 US retailers — including Toys R Us, children’s retailer Gymboree, shoe store Payless and jean maker True Religion — have filed for bankruptcy this year, the most in six years, with analysts describing it as a “day of reckoning”, for companies that rolled over their debt refinancing for years.
Observers warn that the distress is likely to accelerate in 2018 with nearly $6bn in high-yield retail debt set to mature.
The swift unraveling of the toy seller, at $6.9bn the third-largest retail bankruptcy in history, jolted vendors, who are critical to a retailer’s health.
There was some respite for bricks-and-mortar retailers this week with US shoppers spending more than $800bn in the holiday season, a 3.8 per cent rise from last year,
Looking at the article below, it occurred to me that possibly, the private equity firms own some of the debt made to the companies required to pay for their own buyouts by someone else.
Then the fees for those loans are also being paid to the private equity or investment firms holding them, on top of the management fees and other dividend payments, plus other payouts they’re are finagling from the company.
And, all of it providing a stream of resources to the investment funds that should legally belong to the company for its operation, sustenance, growth and as a prudent cash reserve against changes in the market.
The retail apocalypse is being fueled by private equity firms adding to debt loads
Nearly every retail chain caught up in the brick & mortar meltdown is an LBO queen – acquired in a leveraged buyout by a private equity firm either during the LBO boom before the Financial Crisis or in the years of ultra-cheap money following it. During a leveraged buyout, the PE firm uses little of its own capital. Much of the money needed to buy the retailer comes from debt the retailer itself has to issue to fund the buyout, which leaves the retailer highly leveraged.
The PE firm then makes the retailer issue even more junk bonds or leveraged loans to fund a special dividend back to the PE firm. Come hell or high water, the PE firm has extracted its money.
Then the PE firm charges the retailer hefty management fees on an ongoing basis.
(etc.)
A lot of times, these PE firms acquire part of the bonds before bankruptcy of their portfolio company for cents on the dollar. For example, Bain Capital bought significant amounts of Gymboree bonds. This gives PE firms more control during the bankruptcy proceedings, and they win again.
Why do institutional investors fund asset-stripping associated with LBOs and special dividends? Some of the answers are in Wall Street’s culture where fee extraction is everything, and one firm helps another. And too, they’re chasing yield in a world where central banks have repressed yield. Which turns out to be a costly chase.
Sports Authority is Another Loss to Our Country Caused By Leveraged Buyout Nightmare
A number of retailers have suffered this buyout process whereby the company being acquired is forced to pay for itself to be bought out by loading the profit making retailer (or other types of companies) with massive debt and extra costs to pay off cash to those who “bought” it.
But, since when do you or I get to buy something for nothing but a promise of 10% on the cost of it and then enslave the operation to pay off the rest for that purchase while streaming most of its available cash to us in fees and dividends?
From this article describing the process that took apart Sports Authority –
Leveraged buyouts saddle retailers with debts they can’t repay
April 29, 2016
But Englewood-based Sports Authority was loaded with at least $643 million in debt, a hangover from the $1.4 billion leveraged buyout in 2006 by investors led by Leonard Green & Partners.
Sports Authority’s bankruptcy plan initially included closing 140 of its 463 stores. But lawyers for the chain said in court last week that the company now is pursuing liquidation, leaving workers jobless and shopping centers across America anchorless.
(etc.)
In the fast-evolving world of retail, where the one constant is the need for investment, retailers laboring under heavy debt are at a disadvantage.
“Doing it right is very expensive,” said Raya Sokolyanska, an analyst with Moody’s Investor Service in New York. “Limited financial flexibility has been a reason why a lot of these retailers haven’t been able to fight back and position themselves correctly for growth.”
Private equity firms have been connected to a rash of retail bankruptcies in recent years, including Gymboree, Payless ShoeSource, The Limited Stores, True Religion Apparel, and most recently, Toys “R” Us.
(. . . )
But Toys “R” Us wasn’t pushed into court because of terrible sales — it recorded nearly $1 billion in online sales in 2016, according to a spokesperson, and had earnings before interest, taxes, depreciation, and amortization of $792 million. Rather, the company was struggling to pay down its staggering debt load — for which it could thank its 2005 leveraged buyout. Bain Capital Private Equity and KKR & Co. teamed up with real estate investment trust Vornado Realty Trust to acquire the company for approximately $6.6 billion, including $5.3 billion of debt secured by the company’s assets.
Why Private Equity Firms Like Bain Really Are the Worst of Capitalism
Here’s what private equity is really about: A firm like Bain obtains cheap credit and uses it to acquire a company in a “leveraged buyout.” “Leverage” refers to the fact that the company being purchased is forced to pay for about 70 percent of its own acquisition, by taking out loans. If this sounds like an odd arrangement, that’s because it is. Imagine a homebuyer purchasing a house and making the bank responsible for repaying its own loan, and you start to get the picture.
O.K., but what about this much more virtuous business of swooping in and restoring struggling companies to financial health? Well, that’s not a large part of what private equity firms do, either. In fact, they more typically target profitable, slow-growth market leaders. (Private equity firms presently own companies employing one of every 10 U.S. workers, or 10 million people.)
And that’s when the fun starts. Once the buyout is completed, the private equity guys start swinging the meat axe, aggressively cutting costs wherever they can – so that the company can start paying off its new debt – by laying off workers and cutting capital costs.
This process often boosts operating profit without a significant hit to the business, but only in the short term; in the long run, the austerity approach makes it difficult for companies to stay competitive, not least because money that would otherwise have been invested in expansion or product development – which might increase revenue down the line – is used to pay off the company’s debt.
It takes several years before the impacts of this predatory activity – reduced customer service, inferior products – become fully apparent, but by that time the private equity firm has generally resold the business at a profit and moved on.
The next article reminded me of how much is at stake for vendors, toy manufacturers, shippers, shopping malls and strip mall groups that have used Toys R Us to stock their shelves with products, rent large anchor properties and draw traffic to other stores nearby. All of these will be suffering hits, possibly causing layoffs beyond those being caused directly by the bankruptcy of Toys R Us as it closes 2600 stores.
How $5 billion of debt caught up with Toys ‘R’ Us
SEPTEMBER 20, 2017
But the company’s ability to kick the can down the road had been exhausted. The bankruptcy filing was the culmination of an unsuccessful seven-month effort by Toys “R” Us to find relief from its $5.2 billion debt pile, according to bankruptcy court filings and people familiar with the deliberations.
The advisers that Toys “R” Us hired to fix its capital structure explored at least two deals with some of its creditors to raise money that would have helped the company stave off bankruptcy before the key holiday shopping season, avoiding a supply chain disruption stemming from vendor fears about repayment, a bankruptcy filing shows.
Once the company realized that it could not secure financing to get through the holiday season, the objective became “let’s get it done as quick as possible so it does not interrupt the holidays,” Toys “R” Us Chief Executive Officer David Brandon told Reuters in an interview. Filing for bankruptcy allowed the company to secure financing to continue to operate its stores.
Given that “we successfully obtained our debtor-in-possession financing today, we can assure our lenders that we are in a good position to accept shipments on a normal basis and they have great assurance they will be paid,” Brandon said.
(etc.)
Like other retailers that own their stores, Toys “R” Us tried last month to tap its vast real estate portfolio to raise money in a sale-leaseback transaction, according to court filings. Sale-leaseback deals allow retailers to raise cash by selling real estate they own and then renting it back from the new owner. (which didn’t work, my note.)
More Layoffs for Retailers Already Having Massive Store Closings and Layoffs
Jobs everywhere! Except at stores
January 5, 2018
Record numbers of store closings and a surge in retail bankruptcies, as well as the shift to online shopping, have forced retailers to slash jobs even as other employers scramble to find qualified workers.
The sector lost a total of 66,500 jobs in 2017.
General merchandise stores, the segment that includes department stores, were hit the hardest, losing 90,300 jobs, according to the Friday’s December jobs report from the Labor Department. Clothing stores cut another 28,600 jobs. Drug stores lost 18,400.
(etc.)
So the job losses in the sector are likely to continue said Nicholas. In 2017, 7,000 store closings were announced, a record that was more than triple 2016’s number. And the trend will undoubtedly continue in 2018. Sears Holdings (SHLD), owner of both Sears and Kmart, said Thursday it plans to close more than 100 additional stores.
According to BLS data, the number of retail openings in February slumped to 541,000, down by 40,000, its worst performance since 2015. (U.S. News)
BLS data also showed retail layoffs and discharges climbed 37% in February and reached a total of 212,000 – its highest level in nearly two years. (U.S. News)
(etc.)
Unlike in 2008, Americans today are shopping more than ever.
While the last spike in retail bankruptcies during the Great Recession was clearly a byproduct of consumer stress, this time around consumers are actually spending more than ever. According to Gallup, February 2017 marked the highest average in consumer spending since 2008, with no signs of slowing.
The US retail industry is hemorrhaging jobs – and it’s hitting women hardest
January 13, 2018
As the retail landscape undergoes a dramatic transformation, analysis finds 129,000 women lost jobs last year while men actually gained positions.
Between November 2016 and November 2017, the sector fired 129,000 women (the largest loss for any industrial sector for either sex) while men gained 109,000 positions, according to an analysis by the Institute for Women’s Policy Research (IWPR). In the whole labour force women gained 985,000 jobs over the year, while men gained 1.08m jobs.
(also from this article – )
Major retailers shut shops across the US last year. A record 6,700 stores shut in 2017, according to Fung Global Retail & Technology, a retail thinktank. Macy’s alone closed 68 stores and shed 10,000 jobs. Drugstore chain Walgreens closed 600 locations.
A comment in this article says a lot of what I’ve been thinking. And, why is it that Bain, KKR and Vornado didn’t have to pay the loan payments they took out to buy Toys R Us? Shouldn’t that debt belong to the buyers, not the company they’ve bought? (This article also lists a number of the retail bankruptcies from 2017, including Radio Shack.)
Big Wall Street banks are not likely to blow the whistle on asset-stripping scams in the private equity world. They are frequently involved in collecting fees for advising on the LBOs. Then they reap more huge windfalls in fees when they underwrite the bond offerings that load up the company with debt it can’t service on a long term basis.
So the overarching question in all of this is: where is the Securities and Exchange Commission, the so-called cop on the beat that is supposed to be policing the publicly traded corporate bonds involved in these deals?
(and)
In April, Aisha Al-Muslim, a reporter for Newsday, the Long Island, New York newspaper, found the following after an in-depth review of court documents and data from top research firms like S&P Global Market Intelligence:
“…43 large retail or supermarket companies, which owned chains with 10 or more locations, have filed for bankruptcy in the United States since January 2015. The 43 companies controlled 52 brick-and-mortar chains.
“Of those 43 companies, 18 — more than 40 percent — were owned by private equity firms. The remainder were public or private companies or owned by a hedge fund.”
When 40 percent of insolvent large retail companies got this way at the hands of the so-called turnaround experts at private-equity firms while huge amounts of money moved from the coffers of the company to the pockets of the “experts,” it’s time for Federal regulators to get involved.
Private equity firms bled the company dry to turn a profit, and now mass layoffs are imminent.
Upon closer examination, however, this analysis doesn’t hold up. First, the global toy industry isn’t in decline. In fact, it’s been growing consistently over the past five years. Physical toys may be less popular in the United States than they once were, but internationally—particularly in Asian and Latin American countries—the play business is booming. And most of Toys “R” Us’s profits actually come from its Babies “R” Us affiliate which sells not just toys but also health, safety and educational tools for infant care.
Yet most importantly, this analysis fails to account for how Toys “R” Us wound up so deeply in debt in the first place. In 2005, as the company’s stock was regularly losing value due to mediocre sales, management decided to sell the company in a leveraged buyout to a trio of buyers, real-estate-investment trust Vornado Realty Trust and private equity firms KKR and Bain Capital.
This trio played a critical role in the downfall of Toys “R” Us, through imposing massive debt obligations on the company and requiring it to pay back its debts so that its buyers could turn a profit. Meanwhile, the finances of the company were thrown into disarray and employees were hit with wave after wave of layoffs.
Vornado Realty Trust, KKR and Bain Capital financed 80 percent of the purchase of Toys “R” Us, so while the company sold for $6.6 billion, the trio only contributed $1.3 billion. As part of the purchase agreement, the companies also agreed to take responsibility for all of Toys “R” Us’s long-term debt obligations, which at the time totaled $2.3 billion. Once Toys R Us was taken over, however, the debt Vornado Realty, KKR and Bain used to acquire it was pushed back onto the company, skyrocketing its debt obligations to $7.6 billion.
Toys “R” Us has been paying $400 million a year to service these debts. This money could have been used to lower prices or improve the company’s website—not to mention raising pay to its employees—but instead went to paying off creditors. Last year, the company reported a loss of $29 million. If it weren’t for these debt payments, Toys “R” Us would have run a substantial profit.
The buyout firm founded by Mitt Romney — which got slammed this week by the Chapter 11 filing of Toys ‘R’ Us — also saw its reputation dinged a dozen years earlier with the shuttering of KB Toys, which at the time had been the nation’s second-biggest retailer.
In both instances, critics say Bain and its private-equity partners left the chains vulnerable by saddling them with heavy debt loads as they took them private, crippling their capacity to compete in brutal price wars that have dogged the industry.
A leveraged buyout (LBO) is a financial transaction in which a company is purchased with a combination of equity and debt, such that the company’s cash flow is the collateral used to secure and repay the borrowed money.
(also – KKR appears in the history of corporate raiding during the 80’s and beyond – plus this, of interest)
The inability to repay debt in an LBO can be caused by initial overpricing of the target firm and/or its assets. Over-optimistic forecasts of the revenues of the target company may also lead to financial distress after acquisition. Some courts have found that in certain situations, LBO debt constitutes a fraudulent transfer under U.S. insolvency law if it is determined to be the cause of the acquired firm’s failure.[33]
The outcome of litigation attacking a leveraged buyout as a fraudulent transfer will generally turn on the financial condition of the target at the time of the transaction – that is, whether the risk of failure was substantial and known at the time of the LBO, or whether subsequent unforeseeable events led to the failure. The analysis historically depended on “dueling” expert witnesses and was notoriously subjective, expensive, and unpredictable. However, courts are increasingly turning toward more objective, market-based measures.[34]
Private equity typically refers to investment funds organized as limited partnerships that are not publicly traded and whose investors are typically large institutional investors, university endowments, or wealthy individuals. Private equity firms are known for their extensive use of debt financing to purchase companies, which they restructure and attempt to resell for a higher value. Debt financing reduces corporate taxation burdens and is one of the principal ways in which private equity firms make business more profitable for investors.[1]
Bloomberg Businessweek has called private equity a rebranding of leveraged-buyout firms after the 1980s. Common investment strategies in private equity include: leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. In a typical leveraged-buyout transaction, a private-equity firm buys majority control of an existing or mature firm. This is distinct from a venture-capital or growth-capital investment, in which the investors (typically venture-capital firms or angel investors) invest in young, growing or emerging companies, and rarely obtain majority control.
Private equity is also often grouped into a broader category called private capital, generally used to describe capital supporting any long-term, illiquidinvestment strategy.
(and)
Leveraged buyout, LBO or Buyout refers to a strategy of making equity investments as part of a transaction in which a company, business unit or business assets is acquired from the current shareholders typically with the use of financial leverage.[1][4] The companies involved in these transactions are typically mature and generate operating cash flows.[5]
Private equity firms view target companies as either Platform companies which have sufficient scale and a successful business model to act as a stand-alone entity, or as add-on or tuck-in acquisitions, which would include companies with insufficient scale or other deficits.[6][7]
Leveraged buyouts involve a financial sponsor agreeing to an acquisition without itself committing all the capital required for the acquisition. To do this, the financial sponsor will raise acquisition debt which ultimately looks to the cash flows of the acquisition target to make interest and principal payments.[1][8]Acquisition debt in an LBO is often non-recourse to the financial sponsor and has no claim on other investments managed by the financial sponsor. Therefore, an LBO transaction’s financial structure is particularly attractive to a fund’s limited partners, allowing them the benefits of leverage but greatly limiting the degree of recourse of that leverage. This kind of financing structure leverage benefits an LBO’s financial sponsor in two ways: (1) the investor itself only needs to provide a fraction of the capital for the acquisition, and (2) the returns to the investor will be enhanced (as long as the return on assets exceeds the cost of the debt).[9]
As a percentage of the purchase price for a leverage buyout target, the amount of debt used to finance a transaction varies according to the financial condition and history of the acquisition target, market conditions, the willingness of lenders to extend credit (both to the LBO’s financial sponsors and the company to be acquired) as well as the interest costs and the ability of the company to cover those costs. Historically the debt portion of a LBO will range from 60%–90% of the purchase price, although during certain periods the debt ratio can be higher or lower than the historical averages.[10] Between 2000–2005 debt averaged between 59.4% and 67.9% of total purchase price for LBOs in the United States.[11]
Simple example of leveraged buyout
A private equity fund say for example, ABC Capital II, borrows $9bn from a bank (or other lender). To this it adds $2bn of equity – money from its own partners and from limited partners (pension funds, rich individuals, etc.). With this $11bn it buys all the shares of an underperforming company, XYZ Industrial (after due diligence, i.e. checking the books). It replaces the senior management in XYZ Industrial, and they set out to streamline it. The workforce is reduced, some assets are sold off, etc. The objective is to increase the value of the company for an early sale.
The stock market is experiencing a bull market, and XYZ Industrial is sold two years after the buy-out for $13bn, yielding a profit of $2bn. The original loan can now be paid off with interest of, say, $0.5bn. The remaining profit of $1.5bn is shared among the partners. Taxation of such gains is at capital gains rates.
Note that part of that profit results from turning the company around, and part results from the general increase in share prices in a buoyant stock market, the latter often being the greater component.[12]
Notes:
The lenders (the people who put up the $9bn in the example) can insure against default by syndicating the loan to spread the risk, or by buying credit default swaps(CDSs) or selling collateralised debt obligations (CDOs) from/to other institutions (although this is no business of the private equity firm).
Often the loan/equity ($11bn above) is not paid off after sale but left on the books of the company (XYZ Industrial) for it to pay off over time. This can be advantageous since the interest is typically offsettable against the profits of the company, thus reducing, or even eliminating, tax.
Most buyout deals are much smaller; the global average purchase in 2013 was $89m, for example.[13]
The target company (XYZ Industrials here) does not have to be floated on the stockmarket; indeed most buyout exits are not IPOs.
Buy-out operations can go wrong and in such cases the loss is increased by leverage, just as the profit is if all goes well.
(etc.)
The application of the Freedom of Information Act (FOIA) in certain states in the United States has made certain performance data more readily available. Specifically, FOIA has required certain public agencies to disclose private equity performance data directly on their websites.[97]
In the United Kingdom, the second largest market for private equity, more data has become available since the 2007 publication of the David Walker Guidelines for Disclosure and Transparency in Private Equity.[98]
How would it EVER make sense for me as a company to be required to pay the price I’m charging you for buying me?
And, pay the interest on that debt you used to buy me as a company – AND pay you management fees for destroying the company I’ve built that you’re charging me the price of buying – from me – so you can own it?
In what world does any of that make sense as anything but theft and embezzlement whether legal or not?
Can you imagine what it would take to start a company today and garner 15% of the toy market? And yet, here is a company that already has that which is being decimated by a very corrupt business practice of Wall Street investment firms – to the detriment of America.
Again, we have had a horrific shooting at a school in America. There are a lot of people screaming their thoughts about it today and every day since it happened.
I know that people want to help. And, it is easy to say that because of a gun, because it was an assault rifle, because people can buy these weapons – that is what must change.
It might help and it might not, but long before that, people need to know that there will then be other weapons, other ways to do it.
And, there are people screaming right now about mental health or mental disorders being the problem or “issue”. But, what if it isn’t that, considering how many people with those issues either get some help for them or find other constructive and non-harmful ways to resolve those mental “issues” without shooting or hurting anyone. There are millions of people doing that, in fact.
But, what if the real reason these young men are stepping off the edge of reason and sanity to find a gun and equip it with thousands of rounds of ammunition has nothing to do with being able to get the gun nor the mental health industry who has many times been serving these same young men who’ve committed these mass shootings?
What if it is something else that indicates an underlying massive real cause of pushing many people including these men into a desperate anger and frustration that makes it seem to them that they have nothing to lose and can’t stand feeling that way another moment? Or, that they must get even and take it out on others to fix it and make those feelings and thinking change or go away, be satisfied that they’ve done something about it no matter how wrong they know it to be in doing it that way?
Our society in America has completely disenfranchised entire groups of our nation’s people. Most of us don’t do this as our reaction to that fact, but not everyone’s reaction is going to be the same.
Have we been throwing money at mental health programs hoping some psych drugs and a therapist can get people including these young men okay with never being anything but poor, or ever to be able to accomplish anything, or for their entire lives to experience being excluded and rejected from fully participating in having things and doing things with their lives?
Is it really right to believe that some mental health approach is going to fix it all and there will no longer be any responsibility on ourselves, in our communities and in our nation towards people who are never going to live out the expectations of the American Dream for themselves the way things are now?
When there are no jobs available to them but those which won’t pay the support of living independently and doing well for themselves? When there are no real ways to build friendships that are stable and rational nor to have healthy relationships with a girlfriend or boyfriend blossom into the kind of real relationship everyone has seen and read about where couples build their lives together?
When there are no opportunities to have a home, to have a network of supportive and encouraging people they know or to have opportunities to make money, build to have their dreams realized as once was possible in this country?
When there is obviously no way for the principles of fairness and equal opportunities to all Americans to be practiced in this environment of all the resources and opportunities being isolated and available to only a few at the top rungs of our society?
Across this country for years now, our young men especially, have been reaching out to extremist groups from criminal ones to religious ones to white supremacist and racially charged groups to massive underground subcultures to find there – a sense of belonging, acceptance, purpose and value for who they are.
It is obvious they didn’t get that from us as a community or as a nation, otherwise these young men and others would not have sought to find it there in extremist groups. And, the groups know that their members are becoming weapons in their own arsenal for whatever purposes and agendas these groups serve. None of it is a building, constructive, strengthening lives and communities agenda either.
Every time there is a mass shooting or horrific crime of this magnitude, we ask ourselves again about access to guns and suggest mental illness has made this happen. Maybe this time it is finally a moment to take a look at, why is it happening in our country and what we can do to form options that leave guns and going crazy over all this stuff wrong in people’s lives from being the only choices left for them.
Cricketdiane, 02-19-18
Guns, Gun Violence, Mental Health and Disenfranchisement
Workshops to help scientists and engineers pitch their science more effectively were held by 500 Women Scientists organization in a separate room at the same time.
The workshops were expressed as scientists pitching their science and were intended to help communicate more effectively with non-scientists. The one I attended of the three scheduled times was an interesting round table style event with great information and ideas.
As I was there to understand how to more effectively communicate to scientists, the science community, engineers, architects, scholars, researchers, academics and applied science fields, why they should get out and march for science – the ideas that shaped my thinking from the workshop are stunning, to say the least.
I discovered that many people engaged in these fields live in something of a bubble but not because the information about people around them isn’t there, but because it is ignored. Maybe I don’t know how many scientists and engineers that I know or meet, or my neighbors know or meet every day or within our daily lives – neither do scientists and engineers know that beyond the few people they are interacting with daily assumed to know science – they’re ignoring the multitude of people they see and come in contact with – who don’t.
That is a problem.
If I see 50 people today, and 43 of them don’t know much of anything about science or haven’t really made the connection between their own lives and the science / engineering & technologies making it possible around them, then what is the true reality of the situation? Am I really in a bubble because I’m only interacting with the seven of the 50 who had common ground with me? Or only the 3 of those 7 that I already knew? It is an interesting question and I discovered that scientists and engineers / architects and academics may be living in self-constrained bubbles not realizing that the rest of us are here too, didn’t study those specialties and may very well not understand them but need to or want to. Or, at the very least, to we may want and need to understand how those sciences and engineering disciplines are valuable to us, enhance our lives, and that, in fact, we are relying on and using the advantages of them every day.
Without the understanding of the physics of combustion, our cars don’t go anywhere. Without getting the dynamics of that combustion harnessed appropriately, not only do our cars not go, but they become a dangerous combination rather than an effective one for transporting us where we want to go. We marvel at helium balloons for celebrations and birthday parties with its lighter than air quality, but never think about the discoveries from science and engineering that developed them and shaped things we could use from those discoveries. Scientists and engineers can point out those things to us in our interactions with them because they do think that way about it and do know – but they’re not.
In the workshop, I also learned that scientists are apologetic about their intelligence and studying to enhance it – to reach for genius within themselves and within their lives where many of us have not thought that important enough to us to do. I’m ashamed that scientists, engineers, researchers, academics or anyone would need to feel that way. Maybe I’m alone in being proud of them working to bring their mind to greater capacity to learn and to understand what is known, to discover beyond those things to develop things that can be done with it all and to strive for greater use of their intelligence and intellectual faculties. It is more than admirable, it is what we should want as a nation and as a community, for every individual to strive to excellence, to learn, to enhance their mind’s capacity to learn and to grasp what science and engineering has already discovered – and to move that beyond where we are today. It should be cherished and supported – every kind of genius and brilliance, not shamed. And, yet it is shamed in our society and I wish that were not so. It could be celebrated rather than shunned.
So, our science community, scientists, intellectuals, academics, engineers, architects and applied scientists may not be interacting with the solid communities of support around them in real daily life, because we don’t act very supportive when they talk and we feel stupid. Or because we know how smart they are and feel stupid when we as fellow community members come into contact with them. But to me, I’m inspired by them to accept that we are all stupid, including me – on so many things and so many levels with many things yet to learn all the time, and it helps me to want to put the time, the work, the effort and the perseverance in that it takes for me to be smarter, learn and think with greater capacity. And, yes – it still makes me feel stupid, but that’s okay.
The workshop helped the group of people who came to understand how to communicate science and engineering to non-scientists and the public. I heard suggestions that were brought into real terms, like describing the warming and more acidic oceans as a place the fish who live there can’t leave simply because conditions become untenable. Well, they didn’t put it quite like that, but the analogy was perfect for communicating the real problems of changes to our oceans. And, I discovered that the science community has many efforts to try and engage with the public but are not getting the audiences that need to engage with them from the general public and communities within it.
Also, I discovered that scientists don’t understand how many of us just don’t get it when it comes to scientific and engineering things. And, across disciplines – many of the scientists and engineers I’ve met including at the workshop and sign making event, don’t get the science and engineering from the other disciplines around them – whether it is that cooking is literally chemistry, or that people are using technology when they turn the key in their car and it works.
The March for Science on April 22 is hosting a lot of groups that are making efforts to engage the public about why science is important and in support of evidence-based facts, rather than alternative facts altered by the political agenda or business needs of the moment. In the workshop, when I said “evidence based facts”, several scientist laughed and the moderator said, “has it really come to that – we have to call it evidence based?” And, I thought – where have you been that you don’t know that?
It is time for scientists and engineers of all disciplines to take a hard look at what is happening in the real world around them, because it is far more pervasive a problem than budget cuts to science funding. Entire areas of research are being denied, excluded or altered for political purposes and business needs of the short term. Areas and specifics where statistical data had been collected in various forms are being changed to suit making the numbers look better, demographics look better, economic outlooks appear better or to redefine groups of information and statistics entirely.
Not only climate research and ocean research are being de-funded, but allowed focuses of study are being put in place to deny much of the possible research yielding facts that would be unsettling to the current political agenda or to the businesses and corporate interests supporting them. Scientific policy is being made by non-scientists, many of whom do not value science or engineering – even as their lives and business interests rely on them without realizing it. Forensic science tools, programs and research are being discarded in favor of other methods more politically motivated than factual.
And, the US population at a time when to be competitive – must be well educated to a college level or above and have a solid understanding of math, physics, science, scientific method, reasoned and critical thinking, technology, finance, economics, basic engineering, computer coding and business how-to, is lagging behind nearly every other nation in the world. The adult population in the US from elderly to working adults to young adults just entering the job market require these levels of education and skills to be competitive, employable and have the global opportunities that exist in order to survive with a basic sustenance to support living. But, the vast majority of Americans – do not have even the most modest level of those skills, education and applied use of them. And, yet we could – and our science communities can help because they know how important it is.
cricketdiane 04-19-17
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March for Science / Science March – April 22, 2017
April 4, 2017, 6:00 AM EDT April 4, 2017, 9:56 AM EDT
GOP lawmakers are changing role of research in rule making
EPA advisory boards would include industry representatives
Congress and the Trump administration are planning sweeping changes in how science is used to govern public health.
[ . . .]
President Donald Trump has vowed to flatten regulatory hurdles for American business, and Congress’s proposed EPA rules for science would make commerce easier.
[ . . .]
The bills “really pull the rug out from under the independence of the scientific process,” said Thomas Burke, a professor at the Johns Hopkins University Bloomberg School of Public Health in Baltimore and former EPA adviser. “We’re going to turn back the clock on public health. This is the most devastating blow I’ve ever seen.”
[ . . . ]
That was Smith’s rationale for the Honest Act, which the House passed 228-194 on Wednesday. It would bar the EPA from creating any regulation based on data that’s not publicly available or can’t be replicated.
The law would mean eliminating studies that cite epidemiological research, such as the one that led to the banning of the pesticide DDT, which was shown to cause cancer in humans and deadly effects in birds like bald eagles. Leaded gasoline was also taken off the market due to epidemiological research, which exposed its link to brain damage in children.
[ . . . ]
A day after the House approved the Honest Act, the EPA Science Advisory Board Act passed 229-193, allowing industry representatives to serve without special permission, while excluding scientists whose research receives EPA funding. Doing that would prevent extreme views, according to its sponsor, Oklahoma Republican Representative Frank Lucas.
The bill “makes it easier for industry representatives with conflicts of interest to serve on advisory boards at the EPA while making it harder for scientific experts, all while slowing the regulatory process,” Johnson said in a statement.
The vast majority of voters do not support the deep cuts to climate science funding now being proposed in Washington, a new poll has found.
Three-quarters of voters think it is a bad idea to cut money for climate research, according to a Quinnipiac University poll released yesterday. Sixty-five percent say they believe climate change is caused by human activity, which the majority of scientists in the field concluded years ago, but American politicians have been slow to accept.
Meanwhile, the number of voters who say they are “very concerned” or “somewhat concerned” about climate change has increased to 76 percent, up from 66 percent in December 2015.
[ . . . ]
Meanwhile, the Trump administration and Republicans in Congress have proposed cutting hundreds of millions of dollars in climate change research. The cuts are spread across U.S. EPA, the National Oceanic and Atmospheric Administration, NASA, the Department of Energy, and others.
Some GOP lawmakers, including Rep. Lamar Smith of Texas, who chairs the House Science Committee, have said federal climate science has become too politicized. Smith has proposed eliminating federal money for NASA earth-observing missions and restraining the role of science in EPA policymaking.
“We’re not spending money on that anymore,” Trump budget director Mick Mulvaney recently told reporters about climate science. “We consider that to be a waste of your money.”
from Climatewire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news atwww.eenews.net
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GOP’s hostility to science mostly about money
Cynthia Tucker 10:01 a.m. ET April 3, 2017
Not to worry. President Donald Trump has told us that climate change is merely a hoax invented by the Chinese. (It’s not clear what the Chinese would gain from such a ploy.) And to prove that he hasn’t the slightest interest in the warnings of climate scientists, he has gone briskly about the business of dismantling the regulations President Barack Obama painstakingly put into place to try to mitigate the effects of global warming.
Once upon a time, Republicans considered themselves a party of ideas, of vision, of rational decision-making. They employed reason and lauded fact. They embraced scientific discovery. Not anymore.
Among the most worrisome trends — and there are many — seen in modern-day Republicans is their repudiation of science. The party has become a redoubt of fact-free propaganda, asinine conspiracy theories and foolish assumptions. There may be a significant group among them who still believe in scientific discovery, but they are largely silent, content to allow the flat-earthers lead the way.
[ . . . ]
Meanwhile, so far, Trump has failed to fill important scientific posts in his administration. He has, however, signaled an aggressive turn against scientific evidence. During the transition, for example, Trump’s team requested the names of Energy Department staffers who had worked on climate change. To their credit, higher-ups in the department declined to honor the request.
[ . . . ]
Since the 1970s, fossil-fuel companies and other pollution-producing industries have invested heavily in campaigns to cast doubt on the science of climate change. Titans of those industries, such as Charles and David Koch, also have invested heavily in politicians who would do their bidding — which means allowing certain industries to pillage and pollute as they like.
A climate of lies: Denialism goes wider, and weirder, as Trump amplifies Republican mendacity
Climate-change denialists were already terrible, but they’ve grown bolder and more bizarre in the age of Trump
Perhaps the best way to understand the presidency of Donald Trump is to recognize that he’s building on and advancing the already advanced authoritarian tendencies of the Republican Party. Nowhere is this more obvious than when it comes to climate change denial. Even before Trump was elected, a whopping 84 percent of the conservative Republicans polled by Pew Research refused to accept that climate change is real and caused by human activity, and even 65 percent of the moderate Republicans surveyed rejected the facts.
But with Trump in the White House, it’s no surprise that other Republicans feel emboldened in their dishonesty, denying not just scientific data or research but even their own words. Denying something he’s been caught saying on tape is a common habit of Trump, after all.
[ /. . . ]
To the authoritarian, “truth” does not flow from empirical or verifiable reality but instead is determined by those whom the authoritarians deems to be the proper leaders. (Usually a self-appointed designation.) Reality is what Smith or Trump or whatever Republican demagogue says it is, not your videotapes or scientific evidence.
“I haven’t been in a science class in a long time, but the earth moves closer to the sun every year – you know, the rotation of the earth,” Wagner said in an event organized for county commissioners opposed to natural gas drilling regulations. “We’re moving closer to the sun.”
That bears no relationship to reality. In fact, the Earth’s orbit (which is what Wagner probably meant by “rotation”) is literally what keeps it from plummeting toward the Sun. But that’s just centuries-old knowledge, demonstrated through mathematics and observation, so not relevant in our age of Trumpism.
“We have more people,” Wagner added, continuing his imaginative foray into science. “You know, humans have warm bodies. So is heat coming off? Things are changing, but I think we are, as a society, doing the best we can.”
GOP-backed measures seek to rein in science used at EPA (Update)
February 8, 2017 by Michael Biesecker
[ . . . ]
A separate measure would revamp the makeup EPA’s Science Advisory Board. Republicans say the board has been historically stocked with scientists who receive federal research grants, which they allege presents an improper conflict of interest.
“In recent years SAB experts have become nothing more than rubberstamps who approve all of the EPA’s regulations,” Smith said. “Simple changes, such as eliminating conflicts of interests, adding more balanced perspectives and being more transparent can go a long way to restoring the agency’s credibility.”
Democrats suggested the Republicans are seeking to stock the board with scientists paid by industries regulated by EPA.
Former Democratic Congressman Rush Holt, a physicist who is CEO of the American Association for the Advancement of Science, warned that politicians should refrain from meddling.
“Scientists—whether in industry, academia, or the government—must have confidence that they can conduct their work in an atmosphere free of intimidation or undue influence,” said Holt, who testified at the invitation of the committee’s Democrats. “Policymakers should never dictate the conclusions of a scientific study, and they should base policy on a review of relevant research.”
The dishonesty of the Trump presidency endangers our nation in two ways. First, Trump continues to be what he’s been all his adult life: a serial liar. As a result, he is quickly losing credibility at home and abroad. Second, as evidenced by his administrative appointees and proposed budget cuts, he is suppressing information about, and planning for, the global instability threatened by climate change. These two behaviors are supported by a culture of irrationality embedded in the Republican base.
[ . . . ]
In its potential for catastrophic harm, Trump’s worst lie is his repeated claim that climate change is a “hoax.” He knows better. In 2009, Trump and his children signed an open letter in the New York Times to President Obama saying “We support your effort to ensure meaningful and effective measures to control climate change … Please allow us, the United States of America, to serve in modeling the change necessary to protect humanity and our planet.” As recently as the spring of 2016, Trump applied to the Irish government and to the Clare County Council for permission to build a seawall to protect his golf course from “global warming and its effects.”
Trump’s recently announced budget would cut climate change research and preventive programs throughout the federal government, including a 31-percent reduction at the EPA. As Mick Mulvaney, director of the White House Office of Management and Budget, made clear at a press conference on March 16: “Regarding the question as to climate change, I think the President was fairly straightforward — we’re not spending money on that anymore; we consider that to be a waste of your money.”
This is irrational. The American Association for the Advancement of Science, in a statement (AAAS) cosigned by 17 other scientific organizations, has said that at least 97 percent of actively publishing climate scientists agree that “climate change is occurring, and rigorous scientific research demonstrates that the greenhouse gases emitted by human activities are the primary driver.”
The atmosphere was buoyant at a conference held by the conservative Heartland Institute last week at a downtown Washington hotel, where speakers denounced climate science as rigged and jubilantly touted deep cuts President Trump is seeking to make to the Environmental Protection Agency.
Front and center during the two-day gathering were New York hedge fund executive Robert Mercer and his daughter Rebekah Mercer, Republican mega-donors who with their former political adviser Stephen K. Bannon helped finance an alternative media ecosystem that amplified Trump’s populist themes during last year’s campaign.
Half a dozen Trump transition officials and administration advisers attended the gathering, including Myron Ebell, director of energy and global warming policy at the Competitive Enterprise Institute, who headed Trump’s EPA transition team.
[ . . . ]
Kenneth Kimmell, president of the Union of Concerned Scientists, said Heartland “has a long history of promoting ‘alternative facts’ about climate change as well as crank climate denialist theories that are far out of the mainstream scientific consensus.”
Kimmell said the fact that key Trump administration officials are embracing some of their theories is alarming.
“It is distressing to see us going backwards on basic climate science,” he said.
[ . . . ]
Several organizations that have received funding from the Mercer foundation helped sponsor the Heartland conference, including the Media Research Center, the Heritage Foundation and the Center for the Defense of Free Enterprise, a small group based in Bellevue, Wash., whose vice president once vowed to “destroy environmentalists by taking their money and their members.”
The gathering drew about 300 people to the Grand Hyatt, whose corridors buzzed with chatter about carbon levels and “fake” climate science. A man marketing the film “Climate Hustle” bore a sign that read, “Hello, My Name is Al Gore.”
The overarching theme of the two-day gathering: that fossil fuels and elevated levels of carbon dioxide actually benefit human health, the environment and regional stability.
March For Science Warns that Without Truth and Transparency, Authoritarianism Can Take Over
Posted April 12, 2017
Alarmed by the anti-science stance of the Trump administration – in sync with many Republican Party leaders in Congress and across the country – scientists and their allies have organized the March For Science, which will take place on Earth Day, April 22 in Washington, D.C., and over 400 other major cities across the U.S. and abroad. Organizers of the action say their mission is to: “Unite as a diverse, nonpartisan group to call for science that upholds the common good and for political leaders and policy makers to enact evidence based policies in the public interest.”
[ . . . ]
Between The Lines’ Scott Harris spoke with Dr. Sarah Evanega, director of the Cornell Alliance for Science, who talks about the principles and objectives of the April 22 March For Science. [Rush transcript]
DR. SARAH EVANEGA: It’s an unprecedented time, certainly truth itself is under threat and that really threatens the very tenets of democracy. Science, one could argue, and democracy go hand in hand because truth is essential for reason to debate and democracy – without truth and transparency, and the methods inherent to science, democracy is debased and potentially, a creeping authoritarianism can take over.
So, it is a challenge, and it comes at a time where we have unprecedented challenges. Never before have we needed science and innovation in light of the challenges we face around climate change and global food insecurity and so, this sort of threat to science comes at a time when we need science and we need fuel innovation more now than ever.
But to really get a feel for the pro-industry revolution underway inside the nation’s primary environmental watchdog, go to West, a town of 2,800 in sun-baked Texas. A 2013 explosion at a fertilizer plant flattened parts of the city, killing 15 people — 10 of them firefighters — and injuring 200 others. The volunteers had no idea that the tons of ammonium nitrate stored on site could explode.
The blast registered 2.1 on the Richter scale.
In response, the EPA early this year adopted new rules requiring plant owners to disclose the presence of dangerous chemicals to the locals and coordinate with emergency responders. The chemical industry objected, saying it was too expensive and potentially dangerous to force that kind of disclosure.
Late last month, with the Trump administration in charge, the EPA ditched the rule. “We want to prevent regulation created for the sake of regulation by the previous administration,” said Scott Pruitt, the agency’s new director.
The Trump administration is developing a “priority work” list for the Bureau of Land Management’s 10,000 employees that calls on the agency to focus on permitting oil, gas and coal projects and securing the U.S.-Mexico border, presumably through construction of a wall, according to internal documents obtained by E&E News.
The draft five-point “BLM Priority Work” list, which sources say has not been circulated yet to staff, was written by BLM administrators and reviewed by members of the Trump administration’s “beachhead team” of temporary political officials who assumed key Interior Department roles after the inauguration.
[ . . . ]
The priority list tells BLM to ease unspecified “processes” mandated by the National Environmental Policy Act (NEPA) and to streamline “land use planning to support energy and minerals development and other priorities,” including “rights-of-way processing for pipelines, transmission lines, and solar/wind projects.”
{ . . . ]
Trump has ordered BLM to “expeditiously” rescind its hydraulic fracturing regulations and review its methane venting and flaring rule (Climatewire, March 29). And Zinke last month ended the moratorium on new coal leasing, revoked the department’s policy on offsetting development impacts on natural resources, and ordered a review of all its rules on climate change, mitigation and energy development (E&E News PM, March 29).
My note – it is the math and surface area it provides that could be both strength and air cleaning in a massive way for cities. It inspired me and so I looked up things about the pollution neutralizing paints and materials / concrete / cement – which I’ve added the things that stood out to me down this list.
An even grander project, the Palazzo Italia, will use similar materials over 13,000 square meters across six floors when it opens in Milan in 2015. Dutch scientists have also adapted the system to roads, claiming this can reduce pollution by 45%.
The material is not prohibitively expensive — adding as little as 4-5% to construction costs. But the impact of such buildings has been limited to their immediate location, and efforts to develop the concept have led to more novel, personalized solutions.
The paint is formulated on a base of polysiloxane, a polymer consisting of silicon. The active ingredients are tiny spherical nanoparticles made up of calcium carbonate and titanium dioxide (TiO2). This polysiloxane base is porous enough to allow nitrous oxides to diffuse through it and effectively stick to the nanoparticles. In turn, sunlight provides the energy to convert the nitrous oxides into nitric acid which is either disposed of by rain or neutralized by the alkaline properties of calcium carbonate and converted into carbon dioxide, calcium nitrate, and water. These profound chemical transformations are triggered by the ultraviolet radiation absorbed by the nanoparticles.
AND
Millenium Inorganic Chemicals, a British R&D firm has developed what they intended to appropriately name “Ecopaint.” This paint utilizes the same photo catalytic process of the anti-smog cement developed and under going testing in Italy.
NASA-designed Airocide neutralizes indoor air pollution
Called Airocide, this technology “clears the air of virtually 100% of Volatile Organic Compounds (VOC’s) – the harmful gasses emitted by products you have around your home, like aerosol sprays, cleaning supplies, disinfectants, hobby supplies, dry-cleaned clothing, building materials, paints and paint thinners, strippers, pesticides and even air fresheners. This FDA approved device also completely eliminates all mold, pollen, fungi, viruses and bacteria (all major causes of allergy symptoms) that enter the chamber,” according to the Airocide website.
AND
Gizmag reports, “Each Airocide unit incorporates a reaction chamber that contains thousands of tiny glass rings coated inside and out with titanium dioxide (TiO2). With the help of a high-intensity light, the TiO2 produces hydroxyls. When airborne organic molecules are drawn in and make contact with those hydroxyls, the carbon bonds in those molecules are broken.”
This process renders any organic compound inert. The hydroxyls cannot escape the chamber and no cleaning is needed, though the chamber does have to be replaced every year. The Airocide is currently priced at $799 and replacement chambers go for $99.
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The technology has actually been used in places we’ve been visiting for quite some time now. Because ethylene gas causes accelerated ripening, supermarkets, florists and food packers have been using the technology since 1998, and in 2003, Airocide was introduced to hospitals, medical offices and daycare centers to prevent the spread of airborne disease.
Dust suppressants consist of calcium magnesium acetate, which is expected to glue particles to the carriageway to stop them re-circulating in the air. TfL will first sweep and jet wash the roads, then apply the solution using a modified winter gritting machine with a fine sprinkler-like system attached.
Smog-eating cement first made headlines back in 2007, when it was introduced in the U.S. by the Italian company Italcementi, whose R&D center is pictured below. The cement is called TX Active and the magic ingredient is titanium oxide. When exposed to sunlight, titanium oxide can neutralize some pollutants—basically the toxins are oxidized when they come into contact with the cement. For instance, nitrogen oxide and sulfur oxide gasses are made harmless when they are turned into nitrates or sulfates. Without the catalyst of titanium oxide, the nitrogen and sulfur oxide break down in the atmosphere creating smog and ground level ozone.
The concrete is made up of traditional cement mixed with titanium dioxide. This unique mixture allows air to pass through while simultaneously capturing nitrogen-oxide particles, a main component of smog. Titanium dioxide functions as a catalyst to the chemical reaction which is activated by UV light. Not only does it filter the air, but the collected smog residue washes off with a light rainfall. Don’t worry about the residue, it’s made up of inert salts that have no effect on the surrounding environment.
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In total, it took 2,000 metric tons of the bio dynamic concrete to construct the building and it’s creators at Italcementi claim that it is stronger than the equivalent of regular concrete. This added strength allowed the architects and engineers to create the stunning linear shapes seen on the building’s facade with ease.
CHK this site to see a photo of the building – absolutely stunning and it eats air pollution.
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Chinese activist-artist raises awareness by sucking up smog into bricks
Brother Nut’s machine collected over 100 grams of pollutants, much of it made up of small particles some 30 times smaller than a strand of human hair.
He then took the dust, mixed it with clay in a mold, and turned it into an average looking brick.
The art project went viral, to the point that he now gets stopped on the street by pedestrians wanting to take photos.
However, he’s not the first artist to tout a vacuum cleaner as a possible way to clean up the city’s skies.
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In 2013, a Dutch artist and designer Daan Roosegaarde came up with an electro-magnetic device that would pull airborne smog particles to the ground, creating columns of fresh air.
Air pollution can be made of everything from soot to heavy metals like arsenic and lead.
As the latest coal-fuelled “airpocalypse” engulfed northern China this week and world leaders gathered in Paris to debate the fight against climate change, Nut Brother hit the streets of Beijing hoping to raise awareness of his country’s deadly smog crisis.
For the last 100 days, the activist, whose real name is Wang Renzheng, has used the industrial appliance to extract dust and other lung-choking pollutants from the city’s atmosphere before transforming them into a dark brown “smog brick”.
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He ordered a vacuum cleaner from a manufacturer in Shanghai and began taking it on four-hour sorties across Beijing’s urban sprawl, gobbling up pollutants as he went. Photographs published in the Chinese media this week showed him pushing his vacuum cleaner past some of Beijing’s most celebrated landmarks.
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“You can’t tell if it is night or day!” Liu Haishan, 38, a taxi driver, complained on Tuesday afternoon as he attempted to navigate through the gloom.
With pollution reaching 40 times the safe level, China’s capital has issued its first red warning, closing down schools and factories until Thursday. These images show Beijing under a layer of smog – and what it looked like on a clear day
These porcelain plates I designed are available on Zazzle so that you can customize them with your family name, this year or another year of special commemoration and use them to hang on the wall as collectibles and family commemoration plates. Simply use the template field to change my family name and this year, to whatever you want with your family name. Wonderfully pretty.
Every other year a team of geophysicists and weather geeks told the Bloomberg administration about the storm surge that would come and why it would be exceptionally flooding to areas of the city. They explained why protection was necessary while there was still time to do something about it and why it was needed. They used charts and briefs with clear explanations but each time were sent away with nothing done, not one thing accomplished. When Hurricane Sandy came, there was no protection whatsoever.
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In the late 60’s, the scrubbers being requested of oil industry facilities and other high polluting industries would’ve cost between $30 and $60 per smokestack and effluent release pipe – but, no – they wouldn’t do any of it and hired millions of dollars worth of lawyers, pr firms, lobbyists and “experts” to prevent having to do anything.
In the 70’s, it would have cost about $80 each to put that same filter on each stack and about $120 each for the effluent streams. In the 80’s, it would’ve cost about $300 each and $450, respectively. Then in the 90’s, it would’ve been from $600 to $3,000 depending on the system required to be placed, based upon the chemicals being discharged into the air, soil or water by the industry. But, no.
After the year 2000, some of those prices actually went down because of better and cheaper systems and materials with a much better understanding of treating whole systems in a more integrated way – but still, no. All the while, the damage was being done to the environment, to people, to communities and to entire regions of our nation.
And, all the time this damage was continuing to be done to the environment on massive scales across multiple industries, they were spending literally hundreds of millions of dollars on not doing anything. Industries, both individually and collectively as well as their industry associations spent far more on not doing anything or not being required by government to do anything than would’ve been spent if they had simply done something appropriate about it at any given point.
In some jurisdictions, in some states, EPA standards were applied but in many, many others, they were not. After 9/11 because of demand for filtration systems to prevent possible terrorist attacks or at least ameliorate them, and because the value of our US dollar having changed generally negatively, those 1960’s $30 scrubber filters would’ve cost more like $12,000 – $18,000 each even with the newer materials and methods.
Industries and industry groups spent decades of spending what became billions, maybe even trillions of dollars all told, across all of the polluting industries. These costs for attorneys’ fees, fines (occasionally), paying lawyers to appeal the fines till hell freezes over, retaining pr firms, supporting climate denial think tanks, hiring lobbyists and paying lobby firms retainers, supporting PACs, making campaign contributions to anti-EPA and climate denial candidates, and paying “experts” to discredit and decimate the reputations of climate change supporting scientists far exceed the imagination. And, industries supporting those costs spent real money far in excess by many times over what it would’ve ever cost to have stopped sending pollutants into the air, water, soil and forever altering the environment with it.
Thirty something years too late to fix it and now, they’re saying they want to be responsible corporate citizens as politicians they’ve bought are starting to say we might ought to do something about this. As our weather becomes more extreme by each day forward, as our sea levels rise and flooding entrenches entire areas of our country month after month where it had not been expected but once every hundred years or thousand years, when rains come with twenty inches or more in numbers of hours over a couple days rather than across months or weeks, and as arctic glaciers melt that have been there longer than humanity has existed – yeah, now it becomes a thing. It is too late. We have passed the tipping point and it is way too late to worry about it now.
Tree huggers they laughed and smirked, mocking the shunned hippy folks they thought them to be. But now, as it turns out – trees lower the temperature of the climate by two degrees. And, wouldn’t that be handy about now? But the corporate giants of industry cut all the old growth forest and jungles down that they could get their hands on and still to this day, what is left of them are being cut down, clear cut, burned into more carbon in the atmosphere across the globe as if there is not one reason not to do it. And today, see this if nothing else –
Apr 20, 2016 – Australia’s National Coral Bleaching Task Force has surveyed 911 coralreefs by air, and found at least some bleaching on 93 percent of them.
Apr 19, 2016 – Almost 93% of reefs on the Great Barrier Reef have been hit by coral bleaching, according to a comprehensive survey revealing the full extent ..
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AND FOR AT LEAST ONE SOLUTION – INDUSTRY COULD NOW BE USING THIS –
New material shown to remove CO2 from smokestack effluent and other sources
Aug 17, 2015 – Turning CO2 emissions into plastic with algae? It may not be as crazy as it sounds. Niina Heikkinen, E&E reporter. ClimateWire: Monday …
Mar 9, 2016 – Renewable plastic made from carbon dioxide and plants … CO2 required to make PEF could be obtained from fossil-fuel power plant emissions …
completely metabolize them to carbon dioxide (and water). … Life cycle analyses show that bioplastics can reduce CO2 emissions by 30-80 percent compared to …
Sep 22, 2014 – Not only is carbon dioxide readily abundant, it is three to 10 times cheaper than other feedstocks used to make plastics and chemicals, according to Cole. … Eventually, it hopes to harness carbon emissions there and convert it …
Artificial photosynthesis breakthrough turns CO2 emissions into plastics and biofuel. Dario Borghino April 23, 2015. 3 pictures. Researchers have developed an …
Feb 26, 2014 – Could future clothes, bottles and chairs be made from carbonemissions? … The vast majority of plastic is produced from petroleum, which means that … By combining methane and carbon dioxide with a proprietary catalyst, …
Oct 26, 2015 – Energy-Related Carbon Dioxide Emissions at the State Level, 2000- …plastics are subtracted from reported emissions for the states where they …
Oct 27, 2015 – Watch this video. Could plastic trees end air pollution? … As air flows over the plastic resin sails, they grab CO2 and hold on to it. CO2 binds to …
Converting Pollution Into Sustainable Polymers and Chemicals … proprietary catalyst system that transforms waste carbon dioxide (CO2) into high performance, …
Aug 19, 2014 – … a way to make plastic from carbon dioxide and other greenhouse gases. ….. Ocean Plastic Pollution Costs $13 Billion a Year, and Your Face …
Oct 28, 2015 – Pellets of urea fertilizer are made from carbon dioxide in a plant in … can convert CO2 emissions from coal and natural-gas power plants into useful … fuels and raw material for the manufacture of plastics and other chemicals.
Worldwide, we consume approximately 100 million tons of plastic each year. From the EPA’s more conservative estimate to the more liberal one, that’s anywhere from 100 million tons of carbon dioxide emitted to 500 million tons.
The New York Academy of Science March for Science sign making event was held yesterday in Manhattan.
